U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20448 / February 5, 2008
Securities and Exchange Commission v. F. Douglas Murrell, Civil Action No. 1-08-CV-00086-LY (WDTX January 30, 2008)
The Securities and Exchange Commission ("Commission") announced that on January 30, 2008, it filed a Complaint in the United States District Court for the Western District of Texas against F. Douglas Murrell ("Murrell"). Murrell is a resident of Austin, Texas, and is the owner and operator of Capital Consulting Group.
The Complaint alleges that in two separate private transactions from July 2004 through September 2004, Murrell sold the common stock of Stinger Systems, Inc. ("Stinger"), formerly United Consulting Corporation ("UCC") to persons who resold the stock to the public via quotation in the Pink Sheets. The Complaint further alleges that at no time during the stock sales was a registration statement in effect or filed by Stinger or UCC, and no valid exemption from registration was available for these entities. The Complaint also alleges that on or about September 23, 2004, Murrell represented to Stinger's counsel that his son controlled UCC at the time of both private sales to obtain a legal opinion that the shares sold in both transactions should be issued without restrictive legend. In fact, Murrell controlled UCC at the time of both private transactions. The Complaint further alleges that, as a result of the fraudulent sales transactions by Murrell and others, 181,000 Stinger shares were sold through the Pink Sheets during the first two weeks of public trading, which represented approximately 18% of Stinger's public float, and generated net sales proceeds of over $1.044 million.
On February 4, 2008, the Honorable Lee Yeakel, United States District Judge for the Western District of Texas, entered a final judgment against Murrell, enjoining him from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933. The court also ordered Murrell to pay disgorgement of $55,000, and prejudgment interest of $13,178.95. Further, the court ordered Murrell to be permanently barred from participating in any offering of a penny stock, and from inducing or attempting to induce the purchase or sale of any penny stock. Murrell consented to the entry of the final judgment without admitting or denying any of the allegations of the Commission's Complaint.